Africa’s vast economic potential attracts an increasing number of Singapore companies to the continent each year. As more Singapore players seek to unearth new business opportunities in Africa, we highlight two fast-growing sectors where you are more likely to find them.
Made in Africa
“Manufacturing is key to Africa’s development and economic prosperity,” said Ms Yasmin Kumi, Chief Executive Officer, Africa Foresight Group at the recent African Singapore Business Forum (ASBF).
Indomie’s success in Nigeria is a case in point. When the Singapore-based Tolaram Group wanted to produce its instant noodles in Nigeria in 1995, gaps in infrastructure and logistic facilities could not support its manufacturing plant. Undeterred, the company built what it needed – ranging from waste management facilities to electricity generators to logistics infrastructure. Its early investments didn’t just catalyse positive spin-offs for the local economy and spur further developments; they also laid the foundation for Tolaram’s eventual growth. Today, Tolaram operates 13 manufacturing plants in Nigeria generating US$1 billion (S$1.3 billion) in annual revenue1.
Today, manufacturing is on a growth trajectory in Africa. Beyond fast-moving consumer goods, factories are carting out pharmaceutical supplies, mobile phones, solar panels, fertilisers and more. Africa is on a quest to reduce its dependence on commodities export, move up the value chain and produce more of what it needs. An added imperative is to cushion itself from supply chain fluctuations and develop its economies sustainably.
The African Continental Free Trade Area (AfCFTA) implemented in January 2021 is a boost to the “Made in Africa” initiative. Companies can look forward to have their goods move more freely across the 54 member countries and reach 1.2 billion African consumers with over US$4 trillion (S$5.3 trillion) in combined consumer and business spending. The outlook for manufacturing is promising. Africa’s manufacturing sector is predicted to generate US$1 trillion (S$1.3 trillion) in annual output by 2025 and create an additional 14 million jobs2.
To unlock the full potential of its manufacturing sector, Africa needs to strengthen its ecosystem for world class manufacturing, as Mr Kuseni Dlamini, Chairman of Aspen Pharmacare, pointed out at the ASBF. This is where Singapore companies can play a part.
Opportunities for Singapore companies
From produce to products: Africa is rich in agricultural produce and mineral resources. Olam is one Singapore company which has planted itself firmly in Africa’s agribusiness sector since 1989. Specialising in produce such as cocoa, coffee and cotton, the company grows, processes and manufactures in Africa.
Huge opportunities are opening up in agri-food processing and food manufacturing in Africa, an observation by Olam’s Mr Venkatramani Srivathsan, Managing Director and CEO, Africa and Middle East. Singapore companies, including those that export to, or buy raw materials from Africa, can consider investing in local production and processing to capture more value from Africa’s produce.
Paving the way for industrialisation: Infrastructure and energy deficit remain impediments to Africa’s development. You will find opportunities to support Africa’s drive to build more and better roads, bridges, transport nodes and ports to facilitate trade, in order for the AfCFTA to realise its potential. Investments to develop renewable sources of energy using solar power, hydropower and wind can lift certain constraints on economic activities.
Supply chain logistics is another area with market gaps in search of innovative solutions. For example, Ascent Solutions’ smart Internet of Things solutions oiled the supply chains in East and West Africa by speeding up the movement of goods through customs. More recently, GUUD, a technology company specialising in global trade, was appointed by the East African Community Secretariat to operate a centralised platform to facilitate trade document flows.
Building soft infrastructure: Africa looks to beef up its manufacturing capabilities through education, skills training, consultancy, licensing and quality control.
Two Singapore companies recently entered into partnerships with partners in Africa in these areas. RAS Pharma and Biochem Pte Ltd will be providing consultancy to help the MECOWA group in Ghana set up a medical consumables manufacturing facility. Nivésal, an engineering solutions company, tied up with the WAEMU TPO network in West Africa to roll out courses on factory manufacturing set-up and provide consultancy services to their SMEs.
In the next 10 to 20 years, Africa is expected to become the next global manufacturing powerhouse. With the right partners, your next big break may well be made in Africa.
Like manufacturing, digitalisation will be a game changer in Africa. As an industry vertical, digitalisation will potentially overhaul many sectors in Africa, in the way it has changed the rest of the world.
At the ASBF, Mr Coen Jonker, Executive Chairman and Co-founder, TymeBank, predicted that digital technology will solve the “really difficult problems” in Africa.
Take agriculture. Digital connectedness is changing how farmers grow and sell. Previously, Olam used to purchase cashews from intermediaries who liaised with the farmers. The company then developed a mobile application to liaise and buy cashews directly from 5,400 smallholder farmers in Ghana. Cashew farmers see their harvest and income grow, while Olam can trace the origins of the cashews more efficiently3.
Fast-growing internet and mobile internet penetration in Africa will put more services within the hands of previously “unreached” consumers. With some of the world’s youngest and fastest-growing populations, Africa’s digital economy is forecast to contribute US$180 billion (S$238 billion) by 2025.4 Mobile technologies alone have generated 1.7 million jobs and added US$144 billion (S$190 billion) to Africa’s economy.5
Think of how your innovative solutions can apply across the value chain to bring retail, healthcare, education, finance and many other services closer to both end-users and businesses in Africa.
Opportunities for Singapore companies
Fintech will be a key area where Singapore companies can play to their strengths. Digital payment and mobile money applications are investment areas gathering attention. Singapore-based Thunes, a global leader in cross-border payments, recently widened its collaboration with M-Pesa Tanzania to enable more international remittances within East Africa.6 Your business can consider improving access and lowering the cost of financial services for businesses in Africa, as well as an estimated 300 million people who are currently unbanked.
E-commerce platforms are flourishing across Africa, in part due to COVID-19. Africa’s biggest e-commerce platform Jumia reported a 50% rise in transactions in the first half of 2020.7 Africa is also seeing the emergence of all-in-one super apps. Gozem, which is headquartered in Singapore, provides ride-hailing and delivery services across Francophone West and Central Africa, with plans to expand functions as needs grow. You will find opportunities to support the development and delivery of e-commerce in Africa, especially to the underserved digital markets.
Blockchain and cryptocurrencies have the potential to facilitate digital payments, contracts and record management in Africa. These will help African businesses and foreign investors overcome challenges arising from the lack of hard currency, potential fraud and high transaction costs. For example, a recent partnership between Singapore’s InfoCorp Technologies and Lofte Kesho Kenya aims to provide tokenised livestock financing using blockchain in Kenya.
Digital platforms serve as useful conduits to connect capital to projects, or businesses to consumers. Local tech firm KaHa is partnering a Nigerian healthcare provider to monitor patients’ vital signs via a telemedicine platform. At a larger scale, AgroConnect creates an ecosystem platform that connects Africa’s smallholder farmers, banks and agribusiness owners in an end-to-end supply chain. You can leverage platform technology to reach consumers and partners in Africa without geographical barriers.
The absence of legacy systems and technology infrastructure translate into many greenfield investment opportunities that will see Africa leapfrog its digitalisation journey. Africa is now the fastest growing continent, with manufacturing and digitalisation fuelling its development. Get on track and discover how your business can partner Africa in its unique transformation.
Keen to know more about investment opportunities in Africa? contact Enterprise Singapore for more information. With three overseas centres in Johannesburg, Accra and Nairobi, we will help to connect you to market opportunities and partners across Africa.